INVESTOR PRESENTATION 2 0 1 7 R E S U L T S 1 4 M A R C H 2 0 1 8 This presentation is for the use of Burford’s public shareholders and is not an offering of any Burford private fund.
Third-party litigation funding is Legal disputes are not linked with not only here to stay, but primed stock market performance and to expand.” returns can easily outstrip other investment classes.” - The American Lawyer - Financial Times Investors apparently can’t get Burford is unquestionably the enough… Interest in financing dominant force in litigation finance.” litigation shows no sign of - Reuters slowing.” - The Wall Street Journal 2
Financial statement highlights Our 2017 results were generated by 20 separate investments reporting net realised gains Unless otherwise specifically indicated, financial and operational data provided throughout this report is as at 31 December 2017 or for the 2017 fiscal year. Financial statement data generally exclude the impact of amortization of intangible asset and non-recurring acquisition costs relating to the acquisition of GKC Holdings, LLC, investment banking 3 and brokerage fees, exclude third-party interests in consolidated funds and are shown to assist in understanding the underlying performance of the Company.
Investment portfolio highlights Adding Burford’s investment funds, new investment commitments were $1.3 billion in 2017 and the investment portfolio stands at $2.4 billion We compute IRRs by treating our entire investment portfolio (or, when noted, a subset thereof) as one undifferentiated pool of capital and measuring inflows and outflows from 4 that pool. IRRs are computed only as to concluded investments and do not include unrealized gains or losses.
Equity highlights With a market cap of more than $3.2 billion, Burford generated a 103% TSR in 2017 37% • More than $3.2 billion market capitalisation (£2.4 billion) annualised TSR since 2009 IPO Total shareholder return: • • Twelve months through December 2017: 103% $3.2B+ • Since 2009 IPO: 1,250%; 37% annualised market capitalisation • 20 members of management team own 13% of shares outstanding • Share-based LTIP launched for all employees in 2017 639,216 Liquid, tradeable stock • average daily volume in 2017 • Average daily volume in 2017: 639,216 shares • Average daily turnover in 2017: $8.1m (£6.0m) $8.1m • Low net debt / equity leverage: 0.46x at 31 December 2017 • Includes impact of US $180 million bond issued in February 2018 as though average daily turnover in 2017 it had been issued on 31 December 2017 0.46x leverage ratio 5 Figures as of 31 December 2017 unless otherwise stated.
Company overview Burford is the largest direct investor AND the largest investment fund manager in the legal finance sector $3.3B • Founded in 2009, Burford is a leading provider of finance to the legal market invested in and available for Burford has $3.3 billion of assets dedicated to legal and regulatory risk and a global • legal finance reach with offices in New York, Chicago, London and Singapore 90+ • With the largest team of experts in legal and regulatory risk, Burford has an unparalleled origination platform and the world’s most experienced legal employees around the world underwriting and investment management team, including more than 40 experienced lawyers 88% Burford provides capital and other financing solutions to companies, law firms, and • of AmLaw 100 firms have investment funds involved with or invested in complex commercial litigation, worked with Burford arbitration and other matters – addressing a variety of business needs and 50% engaging a range of counterparties across all stages of the legal process • Focus on legal claims and catalyst-driven investments provides differentiated of inquiries have sought funding strategies that help isolate idiosyncratic risk and drive uncorrelated returns for claims valued at $100m+ 250+ years of complex litigation experience on Burford’s Investment Committee 6
Who we are More than 90 people – litigators, bankers, and veterans of top law firms and corporations Christopher P. Bogart Jonathan T. Molot Craig Arnott Aviva O. Will Elizabeth O’Connell, CFA Emily Slater Chief Executive Officer Chief Investment Officer Managing Director Senior Managing Director Chief Financial Officer Managing Director Former EVP & General Counsel, Professor of Law, Former Barrister and Partner, Former Director, Former Assistant General Former Litigator, Debevoise & Time Warner Inc. Georgetown University Fried Frank Counsel, Time Warner Inc. Credit Suisse Plimpton Ernie Getto Peter Benzian Katharine Wolanyk Michael Sternhall John Lazar Christopher Catalano Managing Director Managing Director Managing Director Director Director Director Former Senior Partner, Former Senior Partner, Former Litigator, Cravath, Former President, Former Senior Vice President, Former Assistant General Latham & Watkins Latham & Watkins Soverain Software OppenheimerFunds Swain & Moore Counsel, JP Morgan Chase Matthew Schoenfeld Brian Tracy Justin Daniels Quentin Pak Christy Searl Eric Carlson Portfolio Manager Director IP Principal Director Director IP Principal Former Portfolio Manager, Former Director, Brookfield Former Partner, Proskauer Former Executive Director, Former Senior Vice President, Former Senior Associate, Driehaus Capital Management Asset Management Rose Commonwealth Bank of Lehman Brothers Katten Muchin Rosenman LLP Australia 7
Burford’s Core Business “ “Burford Capital is the titan of litigation finance.” Bloomberg, 30 May 2017 8
What is litigation finance? The supply of capital meeting market demand for financing the asset value of legal claims Burford helps commercial • Litigation finance is a form of specialty finance used by companies and law firms claimholders and defendants involved in commercial litigation manage legal costs and risk and • It uses the asset value of commercial litigation or arbitration to secure financing equips law firms to generate Litigation is an enormous global market: legal fees spent and payments on legal • new business and respond to claims together total hundreds of billions or trillions of dollars annually client needs F O R C L A I M A N T S F O R L A W F I R M S F O R D E F E N D A N T S Unlocks value of unrecognized and De-risks balance sheets by partially Reduces out-of-pocket litigation costs for intangible assets monetizing risk or receivable positions budget and accounting purposes Addresses budget and liquidity Enables firms with a traditional hourly Provides risk management solutions constraints billing model to offer alternative fee arrangements that clients demand Allows companies to preserve working Provides favorable accounting treatment capital for other productive needs vs. direct pay Brings sophisticated financing and liquidity solutions to a sector that is Opens access to counsel of choice constrained from accessing capital regardless of fee structure markets 9
Litigation finance is an attractive investment Attractive absolute returns uncorrelated to traditional and alternative asset classes U N C O R R E L A T E D Return profile of each underlying investment is dependent on the operation of the adjudicative process and uncorrelated to economic conditions and markets D I V E R S I F I E D Diversification by duration, counterparty, industry, claim type and investment structure helps reduce any potential covariance within the portfolio A S Y M M E T R I C A L While most litigation maters settle, and thus resolve without litigation risk, when they do not, the downside of going to trial is generally much smaller than the potential upside G R O W I N G A N D E V O L V I N G M A R K E T The current supply of litigation finance capital is limited and demand is growing H I G H B A R R I E R S T O E N T R Y A small pool of known firms provide capital to the asset class due to the unique cross section of legal intellectual capital and specialised financial skills required for underwriting; many multi-strategy firms do not wish to be involved with litigation 10
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